Infrastructure

Pentland and Orkney wave and tidal grid charge estimates hit £100m

New figures from Scottish Renewables have shown that island communities in Scotland’s first Marine Energy Park are continuing to face massive costs to connect their marine energy projects to the grid.

The analysis, published at Tuesday’s (Sept 18th) Marine Energy Conference in Inverness, reveals charges in the Pentland Firth and Orkney Waters have continued to climb, despite an independent review by Ofgem to reform the charging regime known as TNUoS (Transmission Network Use of System).

Although the review has improved matters for generators on the mainland, charges on the islands are set to rocket, adding significant costs and threatening the economic viability of wave and tidal projects that are in their early stages of development.

Speaking ahead of the Marine Energy Conference, Niall Stuart, Chief Executive of Scottish Renewables, said: “Ofgem’s review was expected to bring down charges for renewable generation given its commitment to ‘facilitate the move to a low carbon energy sector’. However, we are seeing charges on the islands continue to increase, dwarfing those on the mainland.

“The level of charges for Orkney Waters is adding significant costs to wave and tidal projects and can only hold back investment in our world-leading marine energy sector.

“We have to remember that our islands are where some of our best natural resources are and if we are to meet important climate change and renewable energy targets we must find a way to ensure wind, wave and tidal projects can generate electricity for homes and businesses across Scotland.”

The new figures are estimated calculations based on annual grid charges for wave and tidal projects. Estimates of the projected annual connection charges for the Pentland Firth and Orkney Waters area have increased from £56m last year to £107m in 2020. This contrasts with an annual subsidy of some £2m if these projects were to be built in the south west of England – the UK’s other Marine Energy Park.

While the mainland of Pentland Firth has seen a decrease of £4.6m in annual connection charges, the Orkney Waters area has seen a massive rise because electricity generators on the islands are required to pay for ‘local works’ which includes expensive undersea grid cabling from the Scottish mainland to the Orkney islands.

This year’s estimates are also based on a larger grid cable which will be required to transport the increasing capacity of renewable electricity due to be generated in the Orkney waters from wave and tidal devices.

Ofgem’s independent review, Project TransmiT, was launched in 2010 with the view to ensure that we move to a low carbon energy sector whilst continuing to provide value for money to existing and future consumers.

Scotland on track for 2020 100% equivalent target

Figures issued lasrt month show that output from renewables in quarter one 2012 increased by 45.5 per cent on the same period the year before.

Provisional figures from the Department for Energy and Climate Change (DECC) show that renewable electricity generation in Scotland was 4,590 gigawatt hours (GWh) in the first quarter of 2012, up 1,435 GWh on Q1 2011.

The provisional figures also show an increase of 9.8 per cent or 435 megawatts (MW) in installed renewables electricity capacity in Scotland in Q1 2012 compared to Q1 2011.

DECC also issued revised statistics for 2011 which show that renewable electricity generation in Scotland was 13,735 GWh in 2011, a record high level, up 44.3 per cent on 2010, and up 97.3 per cent on 2006.

The revised 2011 figures continue to show good progress towards the Scottish Government’s 2020 target of the equivalent of 100 per cent of electricity demand coming from renewables.

Assuming gross consumption in 2011 was similar to 2010, that means around 35 per cent of Scotland’s electricity needs came from renewables in 2011, beating the Scottish Government’s interim target of 31 per cent.

Last week Ofgem announced (very quietly, under the cloak of the local government elections) their intent to retain locational charging as a principal element in the way in which generators pay to use the UK’s transmission network.

This is a real disappointment for all renewable energy projects in Orkney, Shetland and the Western Isles, and presents a real challenge to Aquamarine Power – and the UK’s nascent marine energy sector.

It is a bitter pill that Ofgem, despite months and indeed years of debate and lobbying, has directed the industry panel (which will work out the details of the proposal) to continue to penalise renewable generation on Scotland’s islands – home to some of the best wind, wave and tidal resources not just in Britain, but in the world.

Our company has a 40MW wave energy project off the west coast of Lewis, in pole position to be the world’s largest fully consented wave farm.

All the elements are falling into place – we have a 40MW lease from seabed owner the Crown Estate; we are about to sign terms with the community-owned Galson Estate for the shore-based power plant; we have applied to regulator Marine Scotland for offshore consents, and are about to apply to local authority Comhairle nan Eilean Siar for planning permission.

That is why this decision is so disappointing.

Ofgem has not given any clear figures in its recommendation, but previous modelling suggests an annual charge of £77 per KW, which along with the annual connection costs will equate to over £3.5million each and every year for our 40MW Lewis project. This is a massive penalty for an early stage technology.

To put this in context, a renewable energy project the same size in southern England would pay just £40,000 a year. But we cannot choose where the best waves are – we have to put our projects at the periphery of the UK.

The economics of these first wave energy projects are challenging enough – and we have all the other arms of government, from DECC to the Scottish Government, Marine Scotland and local councils, doing their bit to help this industry get off the ground.

It is a big disappointment that Ofgem’s proposals are so out of kilter. We will continue to engage constructively with the industry to find a way ahead, and we would urge the Scottish and UK Governments to continue to work together to find an equitable solution for Scotland’s islands.

Report details Scottish Government’s proposed energy strategy

The Scottish Government published an initial draft Electricity Generation Policy Statement (EGPS) in November 2010, to support their Climate Change Report on Proposals and Policies (RPP). The RPP is required under the Climate Change (Scotland) Act 2009 to set out proposals and policies for meeting annual emissions reductions targets from 2010 to 2022.

This refreshed EGPS sets out the pathway to meeting the Scottish Government target of delivering the equivalent of at least 100% of gross electricity consumption from renewables by 2020. It sets out how Scotland currently generates electricity, and the changes needed to meet Scottish Government targets and deliver a low carbon generating mix.

The details below are a brief summary of the main targets and policies. The full report can be readHERE.

The draft EGPS is constructed around a number of relevant targets and related requirements:

delivering the equivalent of at least 100% of gross electricity consumption from renewables by 2020 as part of a wider, balanced electricity mix, with thermal generation playing an important role though a minimum of 2.5 GW of thermal generation progressively fitted with Carbon Capture and Storage (CCS);

enabling local and community ownership of at least 500 MW of renewable energy by 2020;

lowering final energy consumption in Scotland by 12%;

demonstrating carbon capture and storage (CCS) at commercial scale in Scotland by 2020, with full retrofit across conventional power stations thereafter by 2025-30;

Energy demand reduction – summary look at the Scottish Government’s Energy Efficiency Action Plan (EEAP), against the backdrop of a fall in final energy consumption of 7.4% in 2009 compared to the previous year.

Renewables – the importance of renewables in the light of the Scottish Government’s 100% target mentioned above, our target for at least 500 MW of renewable energy (electricity and heat) to be in local and community ownership by 2020; and in the context of the Renewables Routemap and the related heat and transport targets.

CCS – the Scottish Government’s policy is that renewable generation should operate alongside upgraded and more efficient thermal stations, and that there should be a particularly strong role for CCS, where Scotland has the natural advantages and resources which could enable it to become a world leader.

Nuclear – the draft EGPS confirms that nuclear energy will be phased out in Scotland over time, with no new nuclear build taking place in Scotland. This does NOT preclude extending the operating life of Scotland’s existing nuclear stations to help maintain security of supply over the next decade while the transition to renewables and cleaner thermal generation takes place.

Bioenergy – confirmation that biomass should be used in small heat only and CHP applications, off gas-grid, the better to contribute to meeting the Scottish Government’s target of 11% of heat demand to be sourced from renewables by 2020.

Role of electricity storage – developments in this area, while financially and technologically challenging, can help address the variability of certain forms of renewable generation

Transmission and distribution – the draft EGPS reaffirms the important role that Scotland can play in developing greater onshore and offshore grid connections within and across the UK and Europe. It continues to press for a sensible regulatory regime – in particular an equitable outcome on charging – and also looks at the importance of (and need to build upon) the recently published Irish Scottish Links on Energy Study (ISLES) and the importance of developing North Sea grid.

Modelling the target of the equivalent of 100% of gross electricity consumption from renewables by 2020 – modelling commissioned by the Scottish Government confirms that this target is technically feasible. The work, summarised at Annex B of the report, also looks at the changes to the generation mix and power flows which will be required.

Market factors – the draft EGPS also reiterates the need for a sensible outcome to the current process of Electricity Market Reform (EMR) and the need for that outcome to respect the devolution settlement and help deliver Scotland’s renewable and CCS potential.

Solar and wind power for Scottish railway stations

Three ScotRail stations in Fife are generating their own solar power for the first time ever.

A total of 48 solar panels have been installed on the roofs of Dunfermline Town, Kirkcaldy and Leuchars stations. They will produce 3,300kWh of electricity at each site annually. The panels are helping directly power lighting, heating and information signs at the stations by capturing the sun’s energy. All power generated by the solar panels is being used at the stations, with none being sold back to the National Grid.

Stewart Cahill, ScotRail’s environmental compliance manager, said: “This is an exciting £50,000 project as part of ScotRail’s ongoing efforts to further enhance its environmental performance.”

“By introducing the photovoltaic tiles in Fife, ScotRail is reducing its carbon emissions without impacting on the quality service we offer our customers.”

ScotRail has also announced a £75,000 project to install a wind turbine at Montrose station to generate eco-friendly power for the premises. Montrose will become the first staffed station in Scotland to produce its own wind-generated electricity when the 5kW turbine is erected this spring. ScotRail expects the scheme to create up to 9,000kWh of energy annually, to help power heating, lighting and information signs at the station.

Stewart Cahill, ScotRail’s environmental compliance manager, said: “This is an exciting and innovative project as part of ScotRail’s ongoing efforts to further enhance its environmental performance. By introducing a wind turbine at Montrose, ScotRail is reducing carbon emissions without impacting on the quality service we offer our customers.”

The project has been made possible with support from Transport Scotland. The wind turbine has been granted planning permission by Angus Council and has also received landlord’s consent.